Tech stocks’ time in the spotlight is over, and investors should begin shifts to value stocks and cyclical sectors, James Paulsen, chief investment strategist at The Leuthold Group, said in a recent note.
The S&P 500’s brief Thursday correction marks “an opportunity to ‘broaden your bets'” before valuations rebound, Paulsen said.
Money supply growth surged in recent months on the back of Federal Reserve easing and the CARES Act. That trend has preceded economic expansions by 12 months in all eight recessions since 1960, according to the strategist.
The cyclical sectors that avoided bankruptcy during coronavirus lockdowns “may currently be positioned with the greatest upside profit leverage,” Paulsen said.
Still, investors should hold on to some growth positions as their fundamentals remain healthy, he added.
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The S&P 500’s brief correction opened the door for a shift to neglected corners